Fairholme and Third Avenue Try Out Bond Funds
Two focused bond funds look more like stock funds.
If you like Fairholme Fund (FAIRX), you'll probably like Fairholme Focused Income (FOCIX), too. And if you're a fan of Third Avenue Value (TAVFX), you'll probably be intrigued by Third Avenue Focused Credit (TFCVX). But don't be fooled by the similarity in the names of these two new funds. They're charting very different courses.
Fairholme and Third Avenue are known for their stock funds, but neither is new to bonds; Third Avenue, in particular, has long specialized in distressed debt. But Fairholme Focused is staking out conservative territory, taking little interest-rate risk and only modest credit risk, while Third Avenue Focused is assuming a whole lot of credit risk. Both aim to achieve their objectives by holding relatively few bonds--15 to 50 in Fairholme's case, and 50 to 60 at Third Avenue.
The funds are drawing a lot of investor interest right away. Third Avenue Focused Credit is up to $434 million and Fairholme Focused Income has quickly grown to $180 million.
Russel Kinnel does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.